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Our Foolish contributors think that Merck, Nestle, and 3M are all good dividend growth stocks to add to your portfolio. Here's why.

Every portfolio should hold at least a few dividend growth stocks. The problem is that it's not always easy to identify worthwhile contenders. To help, we asked three of our Foolish contributors to share income-generating stocks that might be worth picking up in June. Here's what they had to say.

Steve SymingtonWith shares trading down slightly from where they stood this time one year ago, I think now is a great time for dividend-hungry investors to take a bite of Nestle(NASDAQOTH:NSRGY) stock. The food and beverage giant boasts a healthy annual dividend yield of 3.1% as of this writing, and has either maintained or (more often than not) increased its once-per-year dividend each year since 1959.

But that also shouldn't be entirely surprising given the enormous global scope of Nestle's business, which has been built over the past 150 years to encompass more than 2,000 brands with products sold in 197 countries. This also doesn't mean Nestle can't continue to grow from here; last month, the company confirmed it achieved healthy 3.9% organic growth over the past quarter, including 2.5% growth in developed markets and 5.6% from emerging markets, and expects that modest growth to continue through the remainder of the year.

That said, top-line growth remains constrained due to economic, currency, and political volatility, so Nestle has prudently shifted its focus to margin-expansion initiatives that should allow it to emerge an (even) stronger business when these headwinds abate. And even then, Nestle still managed to churn out free cash flow last year at 11.2% of sales -- an exceedingly impressive feat in the food industry.

For any investors looking to enjoy steadily growing dividends from a stable industry leader, it's hard to find a better-suited portfolio candidate than Nestle.

Neha ChamariaDividend growth investing is all about buying strong businesses with solid earnings power that can drive dividends higher for several years to come. Granted, projecting future earnings isn't easy. But when you have a company with a solid track record and a long-term earnings goal, you can safely bet your money on it. Case in point: 3M(NYSE:MMM).

Don't judge 3M by its seemingly low-profile products like Scotch tape and Post-it notes, for the company is a lot more than that: 3M generated $30.3 billion in revenue in 2015, thanks to a wide product portfolio that serves nearly every key industry, including but not limited to healthcare, automotive, manufacturing, electronics, oil and gas, and aerospace. This diversity has helped 3M double its free cash flow and grow its profits by nearly half during the past decade. The conglomerate has raised its dividends for 57 straight years.

But here's the most important part: 3M is targeting 8%-11% growth in its earnings and 100% "free cash flow conversion" through 2020. In other words, the company expects to generate as much in free cash flow as net profits over the next four to five years. There's no reason why dividends shouldn't grow in line with expanding profits and FCF.

Even if 3M misses its 2020 target, it still has enough room to increase dividends as it's currently paying out only about half its earnings and free cash flow per share in dividends. So, whichever way you want to look at it, 3M is clearly a solid dividend growth stock to own today.

George BudwellMerck(NYSE:MRK) is perhaps rarely thought of as a prototypical "dividend growth stock." After all, the drugmaker's top line is expected to essentially flatline over the next 18 months or so due to loss of exclusivity for the arthritis drug Remicade that it co-markets with Johnson & Johnson. That said, investors might want to take a deeper look at this top pharma name right now for a couple of reasons.

Source: Merck.

Besides offering a better-than-average yield for a pharma stock at 3.35%, the drugmaker's anti-cancer drug Keytruda and the hepatitis C medicine Zepatier could provide some welcome surprises to the upside in the coming months. Based on Keytruda's first-quarter sales, for example, the drug should easily reach blockbuster status this year. Looking ahead, the drug also appears likely to reach Merck's own internal forecast of at least $5 billion in peak sales in the not-so-distant future.

But Zepatier is perhaps the most important new growth product to watch over the next few quarters. Payers have reportedly been warming up to Merck's drug because of its significant price reduction relative to the other top hep C medicines currently on the market. Of course, the drug's reimbursement status with payers will take some time to work out. However, the initial reactions from the biggest payers have so far been extremely positive, which bodes well for the drug's potential to eventually carve out a profitable niche in the massive, yet highly competitive, hep C market.

George Budwell has no position in any stocks mentioned. Neha Chamaria has no position in any stocks mentioned. Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool recommends Nestle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Author

George Budwell has been writing about healthcare and biotechnology companies at the Motley Fool since 2013. His primary interests are novel small molecule drugs, next generation vaccines, and cell therapies.